Short the Greed, Buy the Panic

VIX 25 + Divergence Signals Short Term Reversal

Sold $BOOT +7%

Got a buy signal (or cover signal) on the VIX today around 25. A rare occasion where the market went up a lot, then the VIX also went up showing a ton of hesitation buy traders. This is coming ahead important Fed news, which produced a ton of selling in the afternoon to wipe out most gains. Tape is very much dominated by day-traders and algos. Until volume picks back up, we’ll continue to get wide spreads and inefficient bid/ask pricing. Use limits, otherwise slippage will own you.

The strategy would be to buy up some beaten up stocks, and continue to buy them as the VIX tightens its channel and retraces back to 22 level where we will be shorting heavy.